Freight Broker

Chad Boblett will tell you that a strong relationship between a freight broker and independent trucker is the key to securing profitable, steady loads over time, and that such relationships are founded on honest, frequent, and open communication from the start.

In his seven years spent hauling freight as an owner-operator, that’s what Boblett said matters most, for it sets the relationship’s “tone” for all that follows.

“Good communication with a broker is essential, especially at the beginning,” he stressed. “When you work with them for the first time, they are reluctant to trust you. That’s why frequent check calls, emails, and text messages are a must. ‘The load’s picked up and everything’s fine’ is what they want to hear. Then, as you go along the way, answer anything they ask.”

Boblett pointed out that what freight brokers complain about the most is lack of communication. “Over time, as they get to know you, the communication [frequency] will drop down,” he said, “but it is essential to be frequently in touch at the beginning.”

A former U.S. Marine who served time in Iraq before leaving the military service in 2006, Boblett got started in trucking as a company driver working for flatbed carrier TMC and then the McLane foodservice fleet before an injury sidelined him for a few years.

After he recovered, he got back into trucking as an owner-operator, picking up freight via the DAT Solutions network of load boards.

“About 99% of my freight is from brokers,” Boblett said. “I’m always looking to build a relationship with a new one; that’s been one of the biggest reasons for my success.”

Broker researchBut that doesn’t mean he trusts a smooth-talking voice on the other end of a cell phone right from the get go. Far from it.

“You have to do your homework; you need to go on social media and read reviews of the broker. That’s one of the things that helped me the most,” Boblett stressed. “It’s also not so much about the rate but about their knowledge of the load. Do they understand the type of load they’re selling me? The less information a broker knows about a load, the more I expect the worst, and my rates go up accordingly.”

Kevin Scullin, a DAT product manager, added that freight brokers also have access to a lot of information such as safety ratings, whether a carrier’s operating authority has been revoked, and tools for taking a “deeper dive” into Comprehensive, Safety, Accountability (CSA) scores. Thus, he said truckers also need to do some work on their end to foster a more honest and open relationship with brokers.

“You can’t hide from your past so if there are ‘blips’ on your record, be prepared to speak to them,” Scullin said. “There is publicly available [truck] inspection and crash data. But people are people—they want to hear the nuance of what actually happened.”In terms of growing the relationship between freight broker and trucker, he stressed that making a good first impression is critical.

“The freight broker has expectations and business practices they need to follow, so be sure you have a process in place to get all the ‘legal things’ done, that you are organized and swift in doing that,” Scullin emphasized. “Ideally, think about the other person’s time; make it easier for both sides in the relationship to get the required paper­work done.”

He added that “paperwork is paper­work; whether it’s electronic or truly on paper, get it done.”

That means a trucker needs to be prepared to supply their insurance certificate or certificate operating authority or hazardous materials hauling authorization to a broker if requested. “Your insurance agent also needs to be prepared to receive phone calls about you from a broker, too,” Scullin said. “You need to exhibit that you know how all of that works and be ready to go.”

He stressed, though, that such “paperwork” requirements go both ways; that the broker has paper­work they need to proffer as well.

“They need to provide rate confirmation, tell you what proof of delivery is required, and explain what their workflow is like,” Scullin said.

He emphasized, too, that when working with a broker, motor carriers and owner-operators alike “need to know who they are talking to, that a broker is who they say they are, that they have an insurance bond on file, that they have a valid brokering certificate, and that their phone number is the same one on file with the Federal Motor Carrier Safety Administration.”

Scullin also pointed out that while brokers are focused on “re-utilization” of carriers—that re-using a trucker they’ve had prior experience with is easier and safer than onboarding a brand new one—truckers need to make sure they diversify the pool of brokers they work with in order to maintain their pricing power.“Don’t put all of your eggs in one basket,” he warned.

Boblett noted that also gets back to the basics of the trucker-freight broker relationship: loyalty, integrity and honesty.

“I had a broker agree on a load and a rate, but then I saw them re-post the load [to a load board] and not answer the phone when I called them,” he said. “That’s bad, unethical stuff and it made me mad. They agreed to pay me a certain amount, decided it was too much, and then did not call me. That was six years ago, and I‘ve hauled one load with them over that time. That one deal ruined the relationship. Being truthful and ethical goes a long way.”

Tips for vetting shippers and freight brokers

Jeremy Robison has dealt with a wide variety of financial issues over his career in trucking, including equipment financing, equipment purchasing, lease operator programs, and driver recruiting, plus payroll and equipment maintenance. Today, as president of Tetra Capital, an independent firm offering freight bill factoring and other services to motor carriers of all sizes, he’s also had a good deal of experience on what separates the “good” shippers and freight brokers from the “bad” ones.

“The most important thing you do is to make sure you don’t blindly haul a load for a new shipper or broker without getting proper information about them,” he said. “You need to protect yourself and your trucking company while ensuring you get paid for the loads you haul.”

To that end, he’s boiled down his experience in this area to a few key points small fleets and owner-operators need to focus on before they start pulling freight for a new shipper or broker.

• How long have they been in business? In Robison’s experience, it is not uncommon to find fly-by-night brokers who end up being just a guy and his computer in his basement. Thus, it is important to the success of a trucker’s business to find established, reliable, and trustworthy shippers and brokers, as your money lies in their hands. “It has been our experience that the good ones have more longevity than the bad ones,” he stressed. A good way to obtain this information is by doing a credit check before you haul a load.

• What is their reputation? How have they treated other owner-operators? Google and other Internet search engines are your friends. It only takes a few minutes to search for the company or person to find if anyone has given them negative reviews and why. “Those reviews could—and should—impact your decision to work with a particular shipper or broker,” he noted.

• What are their expectations? Maintaining expectations is the key to having a good relationship with a shipper and/or broker. And you must have a good relationship if you wish to keep hauling loads for them. It can be helpful to ask them up front what their expectations are and how often you should check in to ensure everyone is on the same page and satisfied. For example, how often do you have to check in while under load? Once a day? Every hour? It’s good to get that information up front and established in the working relationship right from the start.

• How do you submit your paperwork for payment? It is always better to be prepared and ensure you are doing everything possible to get paid in a timely manner. To ensure you are doing what you need to for receiving prompt payment, ask in advance about how you should submit your paperwork and what is required. For example, some brokers may want original paperwork, while others may accept faxed or scanned copies. Knowing what is required will save you time and money in the long run.

• How long do they normally take to pay? “Your cash flow is dependent on how long it takes your brokers and shippers to pay you,” Robison pointed out. “Why leave it up to chance when you can use the past experience of others to help predict the future?” By conducting a credit check on a potential shipper or broker, a trucker gets a glimpse of their payment history to see how long they take to pay, what their payment terms are, and what payments they have outstanding.

“The bottom line in all of this is you need to ask questions and perform a little research to ensure you are hauling for trustworthy brokers and shippers,” Robison said. “This will help ensure a good working relationship with both shippers and brokers that will lead to more money in your pocket while hopefully avoiding the horror stories in the process.”

Where freight brokers can benefit

There’s been a feeling of late that, with all the advances being made in “Uber for freight” technologies, the role of the freight broker will be diminished or even eliminated altogether from the transportation chain of the near future.

But Eytan Buchman, vice president of marketing for Freightos, a freight price indexing firm that works with global logistics companies, doesn’t see it that way.

While there’s certainly been an “influx of technology” in trucking, which is putting the industry “in the crosshairs of disruption,” he also pointed out that shippers like Amazon are actually building their own asset-based transportation networks to haul their own freight and will often need help keeping those assets busy.

“This could spark a surge of opportunity for freight brokers looking to diversify their revenue streams, but only those paying attention to the prospects will take the lead,” Buchman noted.

Here are areas where freight brokers can benefit:

• Control the Supply Chain: Freight brokers need to expand their suite of value-added services. Some, by shifting to the role of asset owners, expand control and avoid profit erosion. In other words, brokers may need to seek more responsibility for the majority of a shipment’s transport from manufacturing to the retail shelf.

• Winning Digital Hearts and Minds: The importance of digital transparency in freight transactions has been steadily gaining traction. Modern business customers shop on Amazon Business at work while purchasing personal goods via Amazon at home. Their expectation for digital freight visibility is no different. As a result, savvy brokers are expanding their “technology stack,” providing more insights and on-demand information to users, using digital service to stick out in a crowded market.

• First and Last Mile Delivery: Global air and ocean carriers are shifting toward a direct-to-small-shipper sales model. In order to control the land legs, they will likely buy or partner with outstanding freight brokers and/or truckers. And winning accounts like [freight carrier] Maersk could be a huge boon for their business as they expand into the emerging digital freight ecosystem. This is the ideal opportunity for freight brokers looking to expand their service partners—and to maintain their relevance as on-demand retail booms.

• Sharing Marketplace vs. More Value: From Uber and Convoy to Transfix, in the past two years we have seen the rise of dozens of ‘Uber for freight’ models that have caused a stir among proponents of the sharing economy. When successful, these modes can improve capacity allocation. Combined with auto­nomous trucks, which simultaneously lower operating expenses, brokers will be pushed to provide more value to their customers in the battle for market retention. As travel agents discovered in the “Era of Expedia,” freight brokers will need to identify what the sharing marketplace is missing and offer a viable alternative to shippers who need their shipments. There will surely be a financial outlay as companies will have to try out new ideas and try to shake up the sharing economy. But the cost will certainly be worth it in the long run.

As freight and logistics evolve at a pace unseen in history, participants in every step of the supply chain, including brokers, ought to be paying attention for the threats and opportunities that await them.